Labour’s oil and gas tax plans could see the UK " move towards being uninvestable," Offshore Energies UK (OEUK) has warned. 

In a briefing for journalists, the trade body claimed uncertainty over taxation and licensing was scaring firms away from the North Sea.

Rishi Sunak first announced the Energy Profits Levy - set at 65% - back in May 2022 after Russia’s invasion of Ukraine led to a surge in wholesale and retail energy prices.

He always insisted the windfall tax would be temporary.

However, after Liz Truss’s mini-budget crashed the economy, Jeremy Hunt increased the rate to 75% and extended it for a further two years to 31 March 2028.

In his Spring Budget earlier this month, the Chancellor then pushed the sunset clause back another year to March 2029.

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Meanwhile, Labour has promised a “proper windfall tax,” with the existing levy hiked from 75 to 78%.

Crucially, the party would also close what Rachel Reeves has described as “loopholes” with the current investment allowance which sees oil and gas producers get 91p in tax relief for every £1 they invest scrapped.

Ross Dornan, OEUK's Marketing Intelligence Manager said: “We’ve seen four tax regimes in two years and we’ve seen further changes proposed by Labour aimed at increasing the headline rate of tax and cutting allowances.

“I think this would really make the UK move towards being uninvestable, from a number of fronts.”

In a new report, published today, OEUK claims there is as much as £450 billion worth of investment in the energy sector, with opportunities lasting until 2040.

Chief executive David Whitehouse said investors need “stability, predictability and fair returns”.

He said: “We are in a global race for investment, and UK energy companies need supportive long-term policies, a stable tax regime, and responsible rhetoric from all sides.

“Our journey to net zero and beyond depends on responsibly making the most of our oil and gas production, which is at record lows.

“We’re facing a situation where we must import energy that could have been produced here and where we must rely on supply chain companies that could have been based here.

“The UK’s world class oil and gas sector has reduced emissions by 24% since 2018 and we must build our low carbon future on this achievement.”

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The comments came as Sir Keir Starmer was in Holyhead in Wales to announce a new plan for state-backed offshore windfarms as part of GB Energy.

“Floating offshore wind is going to be a gamechanger when it comes to energy,” he told BBC Wales. “Some country in the world is going to be the leader, and I want that to be the UK. What we can do is have the Westminster government, and the Labour government here in Wales, working on the next generation of energy.”

He said it was part of his party’s plan to “take back control of our national energy security.”

However, Russell Borthwick, the Chief Executive of Aberdeen and Grampian Chamber of Commerce, said while efforts on renewables should be ramped up there needed to be a recognition that the UK “will also rely on oil and gas for decades to come.”

He told The Herald: “It makes no sense to wind down the North Sea prematurely in that context — a point we have made and will continue to stress to all parties ahead of a General Election.

“One way in which the next government could really turbocharge our energy sector and give it the confidence needed to invest in energy transition is to drop the punitive windfall tax on profits and incentivise deployment of renewables and further decarbonisation of existing offshore operations.

"Unfortunately a policy to bleed the North Sea dry will simply displace valuable jobs and new opportunities to other markets across the globe.“